In a recent ruling, the GST Authority for Advance Rulings (AAR) in Rajasthan has declared that softy ice cream mix will be taxed at 18% GST due to its high sugar content. The AAR determined that the primary component of the mix is sugar, not milk, leading to its classification outside the lower 5% GST bracket typically reserved for natural dairy products.
This decision follows an application from VRB Consumer Products, which argued that its “Vanilla Mix” should be classified as a milk product under Heading 0404, attracting a lower GST rate. However, the AAR found that the mix contains 61.2% sugar and only 34% milk solids, prompting the authority to rule that the product is sugar-based with milk solids added, not the other way around.
Harpreet Singh, Partner of Indirect Tax at Deloitte-India, explained that the ruling rejected the classification of the mix as a milk product due to its composition, which includes several other ingredients. The ruling adds to the growing list of GST disputes involving milk-based products, with flavoured milk taxed at 12% and lassi exempt.